Updated for the 2026 tax year
Key points
A backdoor Roth is two steps: a nondeductible traditional IRA contribution, then a Roth conversion. Roth conversions have no income limit.
The pro-rata rule counts your other pre-tax IRA money, including SEP and SIMPLE IRAs, so an old rollover IRA can make most of a conversion taxable.
For 2026, the IRA limit is $7,500 ($8,600 if 50 or older). Conversions must happen by December 31, 2026, but 2026 contributions can be made until April 15, 2027.
A high income can keep you from contributing directly to a Roth IRA. It does not necessarily keep you from converting a traditional IRA to a Roth. That is the basis of the backdoor Roth strategy.
The two steps are straightforward: make an eligible nondeductible traditional IRA contribution, then convert it to a Roth IRA. Whether the conversion is mostly tax-free depends on your other IRA balances and your records.
Start with the contribution rules
For 2026, the combined annual contribution limit across your traditional and Roth IRAs is $7,500, or $8,600 if you are 50 or older. You need enough eligible taxable compensation, or a qualifying spouse's compensation on a joint return, to support the contribution. Opening another account does not give you another limit.
Direct Roth contributions phase out at modified adjusted gross income of $153,000 to $168,000 for single filers and heads of household, and $242,000 to $252,000 for married couples filing jointly. For married people filing separately who lived with their spouse during the year, the range is $0 to $10,000. Different treatment applies if you lived apart all year.
Traditional IRA contributions may be deductible, partly deductible or nondeductible. For a contributor covered by a workplace plan, the 2026 deduction phase-out is $81,000 to $91,000 for single filers and $129,000 to $149,000 for joint filers. A contributor not covered at work but married to someone who is has a different phase-out.
A nondeductible contribution creates after-tax "basis." Form 8606 records it so the same dollars are not taxed again when distributed or converted. Roth conversions have no income limit. Earnings and other pre-tax amounts converted are generally taxable.
Check the pro-rata rule first
You cannot choose to convert only after-tax dollars while leaving pre-tax IRA money untouched. Think of coffee with cream stirred in: each sip contains both.
Form 8606 combines your traditional, traditional SEP and traditional SIMPLE IRAs. The calculation uses their December 31 value in the conversion year, relevant distributions and conversions during that year, and applicable adjustments such as outstanding rollovers. Your spouse's accounts are calculated separately.
For example, suppose you have $67,500 of pre-tax money in a rollover IRA. You contribute $7,500 nondeductibly to a traditional IRA and convert that $7,500. At year end, the rollover IRA is still worth $67,500. Assume no other distributions, basis or adjustments.
The denominator is $75,000: the $67,500 year-end balance plus the $7,500 conversion. Your $7,500 basis is 10% of that total. Only $750 of the conversion is tax-free; $6,750 is taxable. At a 35% marginal rate, that is about $2,363 of federal income tax. The unused basis carries forward.
Some employer plans accept eligible pre-tax IRA rollovers. Moving eligible pre-tax money into such a plan before December 31 may help, because employer-plan balances are outside the IRA calculation. Check the plan's rules, fees and investment choices first. A SIMPLE IRA has an important restriction: during the first two years of participation, transfers generally can only go to another SIMPLE IRA. An improper transfer can be taxable and trigger an additional tax.
Keep the years and deadlines straight
A 2026 IRA contribution can generally be made through April 15, 2027, without extending that deadline by filing an extension. A conversion must occur by December 31, 2026 to count as a 2026 conversion. A contribution and its later conversion can therefore belong on different years' returns.
File Form 8606 when required and keep each year's copy. It tracks nondeductible contributions, conversions and remaining basis. Missing records can lead to tax on money that was already taxed. Filing penalties can also apply.
Roth conversions cannot be recharacterized back to traditional IRAs. Withdrawal rules matter too. Qualified Roth earnings generally require a five-year holding period plus age 59½ or another qualifying condition. Separate five-year rules can impose additional tax on early withdrawals of taxable conversion amounts.
Before contributing or converting, check every relevant IRA, your compensation eligibility and your prior Forms 8606. A zero year-end IRA balance alone does not settle every part of the tax calculation.
A backdoor Roth is one piece of year-end planning. For the wider picture, see our guide to lowering a big tax bill as a high earner in 2026.
Get help before you convert
Asante Tax & Consulting helps business owners and professionals across the Houston area review the tax reporting and timing. Book a free 15-minute tax planning call before making a conversion you cannot undo.
General information only. Your income, accounts and filing status can change the result. Get advice for your circumstances before acting.
